Australian shipbuilder Austal has secured a landmark A$4 billion (US$2.82 billion) contract from the federal government, reinforcing its position as a cornerstone partner in Australia’s naval modernisation strategy.
The agreement marks the second major defence award for Austal under Australia’s Strategic Shipbuilding Agreement. It follows the A$1.03 billion Landing Craft Medium (LCM) contract awarded in December, further strengthening the company’s defence portfolio.
Under the latest contract, Austal Defence Shipbuilding Australia — the company’s private defence arm — will construct eight 100-metre Landing Craft Heavy (LCH) vessels. The vessels will be built using the company’s existing infrastructure along with common-user facilities at Henderson, Western Australia.
Chief Executive Officer Paddy Gregg described the contract as transformational for the company’s future pipeline.
“This contract generates a record order book for Austal, provides a long-term demand signal for our supply chain and provides the incentive to invest in uplifting our capability,” Gregg said.
The market responded positively to the announcement, with Austal shares closing 5.5 per cent higher after rising as much as 7.5 per cent during intra-day trading.
Industry observers view the contract as a significant boost to Australia’s sovereign shipbuilding capability. Richard Ivers, portfolio manager at Prime Value Asset Management, said the deal highlights Austal’s strategic importance within the domestic defence sector.
“Austal is unique in the listed Australian defence sector and the highest quality in the peer group. It’s smart of the government to provide this certainty for Australia’s defence manufacturing base and underpins the long-term outlook for Austal which is good for shareholders,” Ivers noted.
The award underscores the federal government’s continued investment in strengthening its naval fleet and domestic shipbuilding capacity, while providing long-term visibility for suppliers and stakeholders across Australia’s maritime defence ecosystem.
